Netflix will stream movies on Xbox 360

Microsoft stretches, puts arm around distributor

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Microsoft is now flirting with making its Xbox 360 movie download service very nearly interesting thank to a new deal announced today with Netflix.

The software giant has scored a pact to stream a portion of Netflix's movie library on its game console online network. About 10,000 movies and TV episodes will be available to rent from Netflix when it launches in late fall.

The deal was announced at the now-downgraded gaming dog and pony show, Electronic Entertainment Expo (E3).

Streaming content will be "free" to Xbox Live Gold members who are also Netflix subscribers. Or rather — customers won't be charged on top of paying for both premium services. Thank god for small favors.

Netflix has previously teamed up with Roku to sell set-top boxes that similarly allow subscribers to watch streamed movies. The company offers a streaming service, plus three-at-a-time DVDs, for Windows XP or Vista PCs from $19.99 a month.

We'll note that Netflix CEO Reed Hastings also sits on Microsoft's board of directors, although he claims the dots should not be connected to the Xbox deal.

Anyway, the partnership is a good match for fighting Apple's movie renting service.

No word if Microsoft will continue to charge Xbox 360 owners exorbitant sums to rent movies from its current streaming movie plan. ®